Volvo puts up fight against bigger German automakers in home market

Volvo is putting pressure on its larger German competitors in their home market in the key area of average transaction price for new vehicles. The automaker's improvement demonstrates that the ambitious plan of CEO Stefan Jacoby for Volvo is gaining a foothold. In 2011, the automaker ranked fourth with an average transaction price of 35,039 euros in Germany, a 3.7% rise from 2010 based on the data of the Center for Automotive Research at the University of Duisburg.

The automaker's average new-car price was only 1,281 euros below the price of Audi, which increased only 0.3% to 36,320 in 2011. BMW held the top rank at 39,938 euros, followed closely by Mercedes-Benz with 39,912 euros.

The position of Volvo among the German luxury brands in the biggest market in Europe for high-end automobiles is precisely what Jacoby wants to achieve in efforts to double the company's volume to 800,000 by the end of the decade.

Volvo is aiming for sales to boost 61% in Europe to 390,000 by 2020. According to Jacoby in an interview with Automotive News Europe late last year, it is not a sustainable position for Volvo to be "in-between," which means "not being truly premium and losing more and more ground to competitors".

He further stated that they need to have an unambiguous premium positioning and they also have to bring the brand upscale. In terms of pricing in Germany, Volvo absolutely has a strong premium positioning.

Volvo was 11,101 euros ahead of Volkswagen, which is the next ranked brand. In terms of sales in the country, Volvo still has a long way to go before it can become a real threat to the German brands. Last year, it sold 33,888 units in the country compared with 285,651 units for Mercedes and 250,708 units for Audi, based on the data from the German motor transport authority (KBA).